By Felicity Bradstock for Oilprice.com | The United Nations Development Programme (UNDP) and the Government of Norway launched a $200 million initiative in July, aimed at transforming Ukraine’s war-damaged energy sector and supporting the development of the country’s renewable energy capacity. The new initiative will focus on both immediate crisis response and long-term modernisation in line with national priorities.
The UNDP announced the strategic partnership during the July Ukraine Recovery Conference, held in Rome. The initiative is part of the UNDP’s Green Energy Recovery Programme in Ukraine – a multi-year, multi-donor initiative. The project has so far received financing from the governments of Japan, Norway, Sweden, Denmark, the Republic of Korea, Belgium, Germany, and Iceland.
Norway has supported Ukraine’s green energy recovery throughout its ongoing war with Russia, having contributed over $115.3 million through the UNDP to roll out high-capacity cogeneration units and solar power systems across the country. This has enhanced access to energy throughout the conflict, particularly in regions where infrastructure was damaged.
The Norwegian Minister of Trade, Industry and Fisheries, Cecilie Myrseth, stated, “Our $200 million contribution, facilitated through this framework agreement with UNDP, underscores Norway’s commitment to not only addressing immediate energy needs but also investing in Ukraine’s long-term energy security and a sustainable, green future… This is a vital step towards ensuring resilience and stability for the Ukrainian people.”
In terms of immediate relief, the initiative aims to restore heating and water supply for millions of people. It will also provide hospitals and water utilities with solar and backup battery systems.
When it comes to long-term energy security, the initiative supports strategic initiatives aimed at a green recovery and accelerating the shift away from fossil fuels to clean alternatives. There are plans to scale solar energy for critical social infrastructure, such as hospitals, schools, and kindergartens; enhance energy efficiency in water supply and sewage; and implement advanced energy storage solutions. The initiative also aims to strengthen sustainable and transparent regulatory frameworks and support women-led green energy projects.
The UNDP’s Acting Administrator, Haoliang Xu, stressed the significance of the collaboration in supporting the people of Ukraine through sustainable energy development. “UNDP deeply appreciates the support that Norway has provided to UNDP’s Green Energy Recovery Programme,” stated Xu. “It is providing Ukraine with critical energy solutions they need now, while laying the foundation for its green transition. With Norway’s commitment today, we can significantly scale up our support to the Government of Ukraine and help ensure reliable access to energy,” he added.
According to the World Bank’s Fourth Rapid Damage and Needs Assessment, Ukraine’s energy sector has sustained $20.51 billion in direct war damage. Over half of Ukraine’s generation capacity has been destroyed since the war commenced in February 2022, leaving people in several regions of the country without access to energy.
In July, the G7+ Ukraine Energy Coordination Group reaffirmed its support for Ukraine in the war against Russia, as well as for the reconstruction of its energy sector. The Canadian government stated its “unwavering commitment to supporting emergency repairs, fast-tracking deployment of distributed generation, physical protection and scaling-up of renewable energy.”
The group’s efforts align with the European Union Clean Energy Package, Ukraine’s National Energy and Climate Plan (NECP), and other initiatives, which aim to “advance broader energy transition principles aimed at achieving net-zero by 2050, in line with Ukraine’s EU accession path.” Since 2022, the G7+ group has raised over $7 billion in energy assistance for Ukraine.
Considering the extent of the attacks on Ukraine’s energy facilities in recent years, it has been able to recover somewhat rapidly due to good planning and support from multiple donors. Ukraine mitigated much of the damage to its energy infrastructure by building concrete structures, which shielded much of its power transmission substations from attacks.
In the first half of 2024, the country’s energy companies set to work repairing many of Ukraine’s damaged facilities, including roughly 4 GW of thermal and hydropower plants. This has helped to prevent long-lasting, large-scale rolling blackouts. In addition, around 1 GW of gas-fired and solar power capacity has been installed, including off-grid facilities. Ukraine’s domestic gas production rose by 2.2 percent between 2023 and 2024, despite the ongoing conflict.
Ukraine has also imported electricity to help meet the national demand, supported by favourable EU policies. In December, the EU increased the maximum permitted electricity import capacity from 1.7 to 2.1 GW. However, investments in the country’s energy sector and the increased reliance on imports have led to a rise in electricity prices, with 2024 prices increasing by over 30 percent for industrial customers and 63 percent for households.
The financial support from multiple donor countries and institutions has helped Ukraine to rapidly rebuild much of its energy infrastructure, as well as import electricity to meet its needs. In addition, several mitigation methods have helped Ukraine to salvage much of its existing infrastructure and avoid widespread power cuts throughout the war. However, it will likely take several years and billions in investment to help Ukraine’s energy industry fully recover.
By Felicity Bradstock for Oilprice.com
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